I promoted a talk I did in the City last night here, a while ago. My slides are here.
It was an interesting debate, promoted by JustShare, and it saw one of my occasional visits to a church pulpit - something I admit I always enjoy as an active Christian.
My position in this debate was simply stated: I think tax competition unambiguously harmful to the developing world. The evidence is now easy to find: even the IMF agree - as reported here.
And in my opinion it would be very hard to rationally argue that a policy that reduces a state's national income by up to 16% with no obvious benefit arising could be of benefit to any developing country.
Paul Morton, representing the Chartered Institute of Taxation, had a good go at doing so none the less, and at least had the courage to stand up before an audience and state his position, something no one from the Big 4, who were invited to attend, would do.
I thought this fact very indicative of just where the tax debate is right now. I know that those firms are also declining radio and TV interviews on tax havens.
And Paul, who I like, had a hard job of it, because let's be honest, try as you might the underlying philosophy of tax competition is that small states, which I will conveniently call tax havens, use their sole competitive advantage, which is to create legislation, to artificially induce the relocation of profits to their domain where it is lowly taxed, with the long-term goal of undermining the democratic choice of the electorate of larger states who would wish to impose higher rates of tax on corporations and people who are located within them.
The reality is this: tax competition undermines democracy, does not help developing countries, but does without doubt shift the resources of those developing countries to the already wealthy shareholders of companies of the developed world.
It is indefensible.
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“with the long-term goal of undermining the democratic choice of the electorate of larger states”
Where do you come up with this rubbish, you’re no longer misconstruing the truth, but making it up as you go along.
The long term goal of OTC’s are to provide a better standard of living for it’s residents and citizens and always will be.
What possible use would a OTC have to undermine a larger state, never mind having that as it’s goal.
Are you prophesising the 100sq miles of the Cayman Islands secretly plotting to destroy the US so they can send in the turtles to take over?
Creg
I have no doubt at all some who promote tax havens would like to fundamentally undermine the economic and social structure of our western democracies.
All they say and all they do suggests that to be the plan.
Have you noticed what right wing enthusiasts of these places are wont to say?
And have you noticed that they have never succeeded in delivering through the ballot box?
You may be naive: I’m not
Richard
Creg
One other point: when I last heard a panel supposedly representing the Cayman islands speak none had been there for more than 13 years: one for just 18 months
This is not a Cayman plot: these places are occupied by the financial services industry
And I have noticed the distain of that industry for a great deal that I and most people hold dear
If you don’t think this is about politics start opening your eyes
Richard
I can’t speak for the Caymans but I do know a fair bit about the Isle of Man and I can tell you that not all Manx residents benefit from the OFCs. The effect has been to inflate housing costs beyond what first time buyers can afford thereby hitting low paid workers – and there are plenty of them, including those employed at the bottom level of administration in the finance sector. Benefits are even meaner than in the UK and employees have fewer rights. The bottom ten percent on the Island might be better off if the Isle of Man was part of metropolitan Britain if there was a serious social democratic government in London.
There is a significant amount of light industry on the Island that could be developed if London made the Isle of Man a special enterprise zone with a lower rate of corporation tax than on the mainland. But this would be a matter of government support for genuine productive economic activity. That is very different from the abuse of trusts to enable the over privileged to avoid paying their dues.
As for the wider political point the murderous General Pinochet, having imposed market fundamentalism Chicago Boy style on his people at gunpoint then looted millions from his country and stashed it offshore.
2 places close to my heart
Offshore Pirate the IOM already has a much lower corp tax than London, zero.
And the FTC in places like the Cayman’s does help everyone. The work permit costs, fund and trust licenses all help to build schools and hospitals.
Think what Cayman was like 30years ago, when cattle used to suffocate due to the number of mosquitos in the air, and the hopitals and infra structuture were antiquated. The FS have improved things drastically. It may have brought some negatives fast growth always does, but the positives far outwiegh the negatives. The standard of living inCayman is now the highest in the Caribbean.
Richard, it is not politics but survival for many of these islands.
As for the IOM the unemployment rate is only 1.5%, where would the Manx be with out the FS?m Tourism is small now, light industry can’t compete, resources have been stripped including the fish.